http://www.economist.com/content/chinese_equivalents
China is now the world’s second-biggest economy, but some of its provinces by themselves would rank fairly high in the global league. Our map shows the nearest equivalent country. For example, Guangdong’s GDP (at market exchange rates) is almost as big as Indonesia’s; the output of both Jiangsu and Shandong exceeds Switzerland’s. Some provinces may exaggerate their output: the sum of their reported GDPs is 10% higher than the national total. But over time the latter has consistently been revised up, suggesting that any overstatement is modest.

What about other economic yardsticks? Guangdong exports as much as South Korea, Jiangsu as much as Taiwan. Shanghai’s GDP per person is as high as Saudi Arabia’s (at purchasing-power parity), though still well below that in China’s special administrative regions, Hong Kong and Macau. At the other extreme, the poorest province, Guizhou, has an income per head close to that of India. Note that these figures use the same PPP conversion rate for the whole of China, but prices are likely to be lower in poorer provinces than in richer ones, slightly reducing regional inequality.

Kai Ryssdal: There’s a big festival coming up on the Chinese calendar tomorrow: It’s called the mid-Autumn festival. For the past week or so, stores over there have been stocking up on the traditional gift of the season: Mooncakes. They’re pastries, small but rich, with a flaky crust and a sweet filling, usually made of lotus paste.

More than a billion people wanting the same thing on the same day? Smells like a business opportunity to me.

Rob Schmitz: Mooncakes have been likened to pastry hockey pucks. At around a thousand calories, they’re almost as dense. This helps explain why the Chinese don’t buy mooncakes for themselves. They gift them.

Shaun Rein is a strategy consultant in Shanghai.

Shaun Rein: It’s a way of showing respect to business partners and people you want to be close to, and it’s also a way to give them outright bribes.

Yes, bribes — and we’re not talking about briefcases full of mooncakes, but their paper representations, mooncake vouchers.

Here’s how it works: Buy a voucher from a company that makes mooncakes. Give it to your friend, client, local government official. And they, in theory, redeem the voucher for mooncakes. What most people do, though, is sell the vouchers on the black market for cash.

Rein: There’s no embarrassment about saying, “We don’t want this mooncake.” Let’s be pragmatic and get some money out of it.

And when a fifth of the world is in on this, that money becomes an underground economy worth billions.

Dozens of workers pack boxes of mooncakes at a Haagen-Dazs redemption center in Shanghai. Thirteen years ago, the company had an epiphany: They realized the Chinese give mooncakes, but many don’t eat them. It’s like the Christmas fruitcake dilemma in the West. So they thought: Why not make ice cream mooncakes? The ice cream mooncake was born.

Gary Chu manages the company’s China operation.

Gary Chu: It’s huge business. It’s a very important business for us. It’s growing at double digits every year.

Soon after, Starbucks, Nestle and Dairy Queen got into the business. This year, Haagen-Dazs sold 1.5 million boxes. To buy one, you’ll need $50 to $100 worth of vouchers. Want an ice cream mooncake this year? Sorry. Vouchers are sold out. Your only option is the black market.

A back-alley vendor named Yin Jing wears a fanny pack full of Haagen-Dazs mooncake vouchers. They’re made of thick paper; each one has a laser engraved hologram, just like currency. They float like currency, too. Last week, their price peaked. Now with just days to go before the festival, Mr. Yin is looking to unload.

Yin Jing: After the festival’s over, all these vouchers will be expired. So I have no choice. I’ve got to start dropping the price.

This selling frenzy reaches the highest levels of society. Just blocks away, a vendor who only gives his surname — Zhang — just negotiated a deal on reams of vouchers.

Zhang: These are all from government officials. They get so many as gifts, and they feel too embarrassed to sell them to me in person, so they ask their wives to meet me in a coffee shop.

Fresh from his secret government rendezvous, Zhang’s got his game face on, trying to sell all these vouchers before time runs out. If he fails? He’ll be forced to succumb to the spirit of the season by giving away dozens of boxes of mooncakes and keeping a few for himself, at which point the giving will stop, and the losers of this annual game will be forced to eat.

In recent weeks, Nobel prizewinner Liu Xiaobo’s politics have been reduced to a story of a heroic individual who upholds human rights and democracy. His views are largely omitted to avoid a discussion about them, resulting in a one-sided debate. Within three weeks, in Hong Kong, for example, more than 500 articles were published about Liu, of which only 10 were critical of the man or peace prize.

In China, before the award, most people neither knew nor cared about Liu, while, according to Andrew Jacobs, writing in the International Herald Tribune, an “official survey of university students taken since the prize was awarded found that 85% said they knew nothing about Mr Liu and Charter ’08.” A Norwegian Sinologist has elicited comments from Chinese people and indicated that younger Chinese still do not care about Liu. Older Chinese intellectuals are interested in discussing the award, but many do not think Liu is an appropriate recipient.

Imprisoning Liu was entirely unnecessary. If Liu’s politics were well-known, most people would not favour him for a prize, because he is a champion of war, not peace. He has endorsed the invasions of Iraq and Afghanistan, and he applauded the Vietnam and Korean wars retrospectively in a 2001 essay. All these conflicts have entailed massive violations of human rights. Yet in his article Lessons from the Cold War, Liu argues that “The free world led by the US fought almost all regimes that trampled on human rights … The major wars that the US became involved in are all ethically defensible.” During the 2004 US presidential election, Liu warmly praised George Bush for his war effort against Iraq and condemned Democratic party candidate John Kerry for not sufficiently supporting the US’s wars:

[T]he outstanding achievement made by Bush in anti-terrorism absolutely cannot be erased by Kerry’s slandering … However much risk must be endured in striking down Saddam Hussein, know that no action would lead to a greater risk. This has been proven by the second world war and September 11! No matter what, the war against Saddam Hussein is just! The decision by President Bush is right!

Liu has also one-sidedly praised Israel’s stance in the Middle East conflict. He places the blame for the Israel/Palestine conflict on Palestinians, who he regards as “often the provocateurs”.

Liu has also advocated the total westernisation of China. In a 1988 interview he stated that “to choose westernisation is to choose to be human”. He also faulted a television documentary, He Shang, or River Elegy, for not thoroughly criticising Chinese culture and not advocating westernisation enthusiastically enough: “If I were to make this I would show just how wimpy, spineless and fucked-up [weisuo, ruanruo, caodan] the Chinese really are”. Liu considered it most unfortunate that his monolingualism bound him in a dialogue with something “very benighted [yumei] and philistine [yongsu],” the Chinese cultural sphere. Harvard researcher Lin Tongqi noted that an early 1990s book by Liu contains “pungent attacks on the Chinese national character”. In a well-known statement of 1988, Liu said:

It took Hong Kong 100 years to become what it is. Given the size of China, certainly it would need 300 years of colonisation for it to become like what Hong Kong is today. I even doubt whether 300 years would be enough.

Affirming this sentiment in Open magazine in 2006, he added that progress in China depends on westernisation and the more westernisation, the more progress. While his supporters excuse Liu’s pro-colonialism as a provocation, it logically aligns with his support for total westernisation and US-led regime changing wars.

Liu, in his “Charter ’08”, called for a Western-style political system in China and privatisation of all enterprises and farm land. Not surprisingly, the organisations he has headed received financial support from the US government’s National Endowment for Democracy. Studies show, however, that where transitions to electoral democracy occur in countries with low levels of average wealth, the rule of law does not necessarily follow, but instability and low levels of development do. Neither does electoral democracy deliver good governance, nor even sustain itself under such conditions.

Nowhere in the post-communist or developing world has there been the fair privatisation Liu claims to seek. Privatisation in eastern Europe often led to massive thefts of public property by oligarchs and became deeply unpopular, with strong majorities of people in all post-Communist countries wanting its revision. Privatisation is also disliked in India, Latin America and China itself, while studies of privatisation in many parts of the world show it can have a deleterious effect on development. Land privatisation in China would rapidly create land concentration and landless peasants.

Forty years ago, a Nobel prize committee upheld formerly imprisoned writer Alexander Solzhenitsyn as a symbol of freedom against the Soviet regime. As with Liu, it may have been unaware of or chose to ignore Solzhenitsyn’s classically reactionary views: his own version of authoritarianism, an animus toward Jews, denunciation of the US for not pursuing the war in Vietnam more vigorously, condemnation of Amnesty International as too liberal, and support for the Spanish fascist dictator Francisco Franco.

The Nobel peace prize is a prize for politics of certain kind. The Norwegian Nobel Institute director has noted that the Nobel Committee has most often selected “those who had spoken out … against the Communist dictators in Moscow and the dictators in Beijing.” French philosopher Jean-Paul Sartre recognized the Nobel prizes’ role in the Cold war and refused to accept one in 1964. He stated: “In the present situation, the Nobel Prize stands objectively as a distinction reserved for the writers of the West or the rebels of the East.” That role has been continued with Liu’s prize.

July 9, 2010

BEIJING — Ten years ago, China’s leadership launched its “Go West” campaign, an ambitious plan to develop and modernize the country’s poor western hinterlands. The aim was simple: to close the region’s yawning income gap with the more prosperous east and assuage restive minority populations, particularly in Xinjiang and Tibet.

China’s economic boom had largely left the west behind. Spreading the wealth was as important politically as economically — it was a way of increasing domestic stability and cementing the government’s control.

Chinese officials rattle off all the statistical measures of the program’s success: Highways were constructed. Houses were built. Nomads were resettled in “model” villages. Millions of people have electricity and clean drinking water. A rail line links Beijing in the east to Lhasa on the Tibetan plateau. And annual economic growth in the west is about 12 percent, higher than the national average.

But beneath the barrage of official statistics lies another reality. China’s west — defined as the dozen provinces and “autonomous regions” stretching from Inner Mongolia to Xinjiang and Tibet — remains the poorest, least-developed and least-educated part of the country.

The massive investment, critics say, has mainly benefited state-owned companies that build the roads and railways and mine the minerals. There is little indigenous industry and scant foreign investment. Hundreds of thousands of people have been displaced from their homes, and nomads have been resettled into villages where they have no livelihood. Locals complain that China is primarily interested in extracting minerals to keep the factories back east running.

The decade of development spending still has not bought the loyalty of China’s ethnic minorities. Muslim Uighurs in Xinjiang rioted last year, and Tibetans rose up in March 2008. Beijing has responded by severely tightening control in both places.

“The government has talked for years about this and that benefit they have brought to Tibetans,” said Tsering Woeser, an outspoken Tibetan poet and blogger in Beijing. “But they never explained why, if the people are so happy, such a big riot happened.”
Woeser added: “In recent years, there have been improvements in housing, electricity and water supplies. But these improvements cannot compare with the price Tibetans pay.”

The sentiment is not confined to Tibet. Most agree that China’s decade-long building spree has led to tangible improvements. “The economic development of the western region has made huge strides,” Premier Wen Jiabao said late last year, announcing China’s plans to continue the Go West campaign “unswervingly” for another decade.

Who actually benefits?

But the question is: At what cost to indigenous populations and the environment? “Nobody disputes that there are now many miles of roads and many airports and people coming in on planes,” said Robert Barnett, a Tibet expert at Columbia University. “It’s misleading to just ask if there’s been economic progress. Who benefits from it? What is the cost locally, culturally and politically?”

Nicholas Bequelin, a China expert with the Asian division of Human Rights Watch, said: “It’s not a people-centered modernization program. It’s a top-down program that has mostly benefited state enterprises and the party-controlled institutions.”

Xinjiang is China’s largest region, making up one-sixth of its landmass, and Tibet is the second-largest, twice the size of Texas and accounting for one-eighth the area of the country.
The west, as China defines it, includes coal mining areas such as Shanxi; tiny, dirt-poor Ningxia; and relatively better-off provinces such as Sichuan. The west borders 14 countries, makes up 70 percent of China’s landmass and is home to 27 percent of the population.

Timothy Oakes, a geography professor at the University of Colorado at Boulder, has worked regularly in Guizhou, in southwestern China, for more than 20 years. “The basic infrastructure improvements have actually been quite stunning,” he said, adding that new highways have “changed the whole way of life in a whole lot of places.”

But Oakes also said the development has been uneven and has failed to help Guizhou catch up with more prosperous areas: “The numbers mask the fact that you probably have the same degree of inequality in those regions as before, and probably worse. I still see large amounts of the countryside that are not being affected.”

Small-scale business

Chinese officials mention handicrafts and pharmaceuticals as two growing local industries. But economists said those are extremely small-scale. “They can’t be the local economy’s backbone,” said Yi Peng, a finance and economics commentator in Beijing.

The reasons include economics and geography. In China’s export-driven economy, factories need to be close to the ports, and that means on the east coast or in the southeast. “Inland areas are bound to fall behind,” Yi said.

The bulk of the economic activity in the western provinces is in mining. But local areas get little economic benefit. The biggest impacts, many critics say, are that people are relocated and that fragile ecosystems are threatened.

Tibet was recently discovered to be a treasure trove of mineral deposits — iron ore, copper, lead and zinc that could reduce China’s reliance on minerals from abroad. But activists, academics and others are worried that Tibet’s delicate ecology will come under assault from an influx of Chinese mining concerns.

“Is it really necessary to develop the west?” Yi asked. “In my opinion, the living environment and the people’s feeling are the most important.”
ad_icon

June 27, 2010

Is the “China Fantasy” starting to get deflated by reality? Three years ago, Jim Mann’s provocative book of that title identified the “China Fantasy” as the dogmatic belief of many Western political and commercial elites that China’s economic liberalization and growth would lead inevitably to democracy at home and responsible conduct abroad. The operative word was “inevitably” — the assumption being that China’s remarkable economic success would automatically produce a middle class that demanded greater political rights, and that China’s growing integration with the global economy would produce benign and responsible international behavior. Based on this assumption, the corollary policy prescription for the West was to pursue a policy of engagement and encouragement towards China’s rise.

This paradigm seems to be shifting. I recently participated in a conference in Europe on China, attended by a cross-section of policy, academic, and commercial leaders from Europe, the United States, and China, and came away struck by palpable attitude changes in at least three dimensions. Taken together, these are signposts that the previous conventional wisdom on China is coming under question:

* European attitudes. Many of the Europeans present voiced a pronounced skepticism towards China, both for the Chinese Communist Party’s ongoing refusal to liberalize the political system as well as for what they perceive as China’s irresponsible international posture. Various reasons were suggested for this change in European attitudes from even two years ago, but the most salient one seems to be European ire over China’s obstreperous conduct at last year’s Copenhagen climate change conference. If Europe has a litmus test for international good citizenship, it is climate change. But China’s behavior on that front seems to be prompting increased European frustration with China on other issues as well, including human rights, Iran’s nuclear program, and China’s military build-up.
* Business attitudes. American and European business leaders with extensive China experience also expressed significant disillusionment. As one noted, whereas 5 or 10 years ago the business community was virtually unanimous in its enthusiasm for the China market and in support of closer political ties between China and the West, now the consensus is fractured. Causes for this disenchantment include widespread corruption, intellectual property rights violations, the protectionism of the new “indigenous innovation” policy, and the general restraints on private sector flourishing imposed by China’s state capitalism model. To be sure, many multinational companies remain profitably invested in what is still the world’s largest emerging market, and many more are eager to get in. But Google’s recent exit from China may not be the only one, and some multinationals looking at China are weighing a new set of cost-benefit analyses.
* Chinese attitudes. If assessments in the West are changing, so are elite Chinese attitudes. Most of the Chinese participants were from universities or think-tanks (i.e. not People’s Liberation Army hard-liners), but even they displayed a nationalistic confidence and rather defiant posture towards the West, especially the United States. At its most benign, this is an understandable attitude of a proud rising power. But in too many ways it is not benign, especially considering that the Chinese participants took worrisome stances on issues such as human rights, Taiwan, Tibet, mercantilist nationalism, Iran’s nuclear program, shielding North Korea, and especially the security “threat” purportedly posed by the United States.

The erosion of the “China fantasy” does not mark from a precise date, but a watershed moment ironically may have been the 2008 Beijing Olympics. Anticipated as China’s grand arrival on the global stage, the Olympics were by many measures a major success — and not just for people named “Michael Phelps.” Yet surrounding the Olympics were constant reminders of Beijing’s authoritarianism, whether the petulant rhetorical attacks on Tibet supporters, the draconian efforts at pollution reduction, the omnipresent surveillance, and the tight control on any voices of dissent. Put it this way — as obnoxious are those %&*!@ vuvuzelas at the World Cup, they are also the sound of a free society. You can bet they would have been banned in Beijing.

The end of the “China fantasy” does not necessarily prescribe a wholesale shift in the free world’s posture towards China — just a more realistic one. For the United States, this has several policy implications:

* Remember that “engagement” doesn’t just apply to the government to government relationship with Beijing, but also to the people of China. A forward-looking China policy must include increased support for the seeds of civil society in China — especially young entrepreneurs, religious leaders, human rights activists, students and scholars. Much more than the CCP, they are the best hope for the future of China.
* Keep cultivating our alliance partners in Asia, and also build ties with emerging powers. Nations as diverse as Australia, Japan, Vietnam, Indonesia, South Korea, Singapore, and India have two things in common: they are wary of China’s aspirations to regional hegemony, and they desire closer ties with the United States.
* Strengthen our defense capabilities to deter China’s emergence as a viable peer competitor. The problem with China’s military build-up is not just that it is non-transparent, but that much of it seems designed specifically to counter American force projection and capabilities. For the United States, this means everything from improved cyber-security, command and control system protection, and anti-ship missile defense to, yes, a sufficient F-22 force to preserve air superiority.
* Get our debt under control. Not that the United States needs yet another reason to tackle its mind-blowing $13 trillion debt, but the fact that China owns close to $1 trillion of it is a further concern. The debate will continue over whether this debt financing imbalance actually leaves China or the United States more vulnerable in the aggregate (see this Dan Drezner article for a thoughtful analysis), but at a minimum it is a strategic constraint on the United States.

None of this precludes continued bilateral cooperation with China on important issues, or continued support for sound investment in such a vast market. The “China fantasy” was based more on hope than experience, but the benefit of recent experiences with state capitalism is the chance to replace hope with prudence.

BEIJING — In late 2008, with the financial crisis rippling through the global economy, China’s leaders embarked on a two-year, $586 billion spending program to try to stave off a recession and keep the Chinese economy growing.

Unlike in the United States — where President Obama’s large stimulus plan became the subject of protracted congressional wrangling and was shaped to include tax cuts and aid to states — Chinese leaders followed a simple mandate: Spend and build.

Forget the tax cuts; in China, it was infrastructure, infrastructure and more infrastructure.

China was already awash in big-ticket construction projects. The stimulus allowed China to speed up some projects, begin digging on others and extend the building boom to less-developed areas in the country’s west and north. The result, 18 months after the stimulus was introduced, is an astonishing frenzy of building — highways, subways, airports, bridges, high-speed rail lines and even new cities constructed, literally, in the middle of nowhere.

China is building tens of thousands of miles of expressways at a pace unseen since the U.S. interstate boom in the 1950s, and it is on track to pass the United States in total highways in the next decade. Among other infrastructure projects — which now amount to 15 percent of China’s gross domestic product — are nearly 100 new airports, some serving isolated cities few outsiders have heard of, and dozens of subways.

“They basically got started about three months earlier than we did, and it was bigger,” said Nicholas R. Lardy, an expert on the Chinese economy with the Peterson Institute for International Economics.

Now a year and a half into the spending spree, and with the stimulus set to end in just six months, many economists and others here are asking pointed questions: Does China really need all this infrastructure? And what’s going to happen when the bills come due?

“In China, we have an old saying: ‘If it’s medicine, it will have some poison inside,’ ” said Guo Tianyong, director of research for the Central University of Finance and Economics. “So the stimulus must have some bad effects.”

“You see little counties building airports — how many people will fly there?” Guo said. “Small cities — why do they need a subway? Maybe there’s no market for all this infrastructure.”
Several economists said it was difficult to determine the worth of all the spending because there is no official, centralized list of projects — making it difficult to untangle whether projects are funded from stimulus loans, from local governments floating bonds or from some combination of the two.

“It’s a black box financed by black laws,” said Xu Xiaonian, an economics professor with the China Europe International Business School. “There’s not enough information to make any sensible judgment.”

But enough is known for economists to point to a crucial difference between the Chinese and American stimulus plans.

Along with their electricity bill from the state-owned power company, Taiwanese residents recently received a pamphlet extolling the virtues of a trade agreement with mainland China. The Economic Co-operation Framework Agreement, or Ecfa, as it is known in the elegant phraseology of trade negotiators, is the centrepiece of the Taiwanese government’s drive to repair relations with Beijing. If things go to plan, an agreement could be inked by the end of the month.

Ma Ying-jeou was elected president in May 2008 with a mandate to mend fences with Beijing. In truth, there was not really much of a fence left. His predecessor, Chen Shui-bian, had infuriated Beijing by pursuing what it regarded as a “splittest” agenda. Mr Chen, the first non-Kuomintang leader of Taiwan in 50 years, had sought to enact a new constitution that would strengthen the island’s independence. He had “Taiwan” – rather than the Republic of China – embossed in passports and pursued a United Nations seat for an island that Beijing still regards as a breakaway province.

Mr Chen’s presidency ended in ignominy. He is currently serving a 20-year sentence for corruption. Mr Ma, the beneficiary of that fall from grace, has moved swiftly to unpick his predecessor’s separatist handiwork. Taiwan has cooled the independence rhetoric and established direct flights and shipping routes across the 110-mile-wide Taiwan Strait. The island’s 23m people – 4 per cent of whom live and work on the mainland – can now fly direct to 23 Chinese cities. Shanghai is an hour and 20 minutes away instead of the day-long slog, via Hong Kong, that it used to be.

The kiss-and-make-up atmosphere was symbolised by China’s delivery, six months into Mr Ma’s premiership, of two giant pandas to Taiwan. Their names, Tuan Tuan and Yuan Yuan, cunningly combine to spell the word “reunion”, angering an opposition already complaining that the black-and-white ambassadors did not come accompanied by the requisite export papers. (Beijing naturally regarded their transfer as a purely domestic affair.)

Now, Mr Ma, who was born in Hong Kong of mainland parents, wants to go one step further by concluding a trade agreement. The not-unreasonable rationale is that Taiwan’s political status is making it increasingly isolated. It has been excluded from a web of free trade agreements that have shot, Spiderman-like, across Asia. Its growth slowed to a lacklustre average of 4 per cent during the eight years of Mr Chen’s presidency. Mr Ma says Taiwan’s isolation is damaging its attractiveness as a destination for foreign investment.

The danger of being left out in the cold was illustrated with the January enactment of the China-Asean free trade agreement. This gives the 10 countries of the Association of South East Asian Nations preferential access to China’s vast market, potentially deepening Taiwan’s disadvantage. Mr Ma says a deal with China will even things out by reducing tariffs on Taiwanese exports to the mainland and clear the path for agreements with other Asian nations too scared to offer bilateral deals to Taipei.

The opposition senses a trap. It says Beijing wants to draw Taiwan into its economic embrace until reunification becomes a fait accompli. Frank Hsieh, who lost to Mr Ma in the 2008 presidential election, says mainland companies have started to infiltrate Taiwanese media, spreading the pro-Beijing gospel. He concedes that lower tariffs might help some big businesses in industries such as petrochemicals and textiles, but says smaller ones will suffer from a flood of cheap Chinese imports. Taiwan, he says, already sends 41 per cent of its exports to China. It needs to diversify, not deepen its dependence.

Morris Chang, considered the father of Taiwan’s world-class semiconductor industry, supports the deal, though he says it won’t affect his own business. “The general direction we should take is to be more open to China and vice versa,” he says. Mr Ma is not a “babe in the woods” who will negotiate away Taiwan’s economic wellbeing or de facto independence for a quick deal.

Even Jimmy Lai, a staunchly anti-Beijing entrepreneur and media impresario, supports the agreement, saying Taiwan can benefit from China’s dynamism without compromising its freedoms. “China wants to integrate the economies slowly, slowly and eventually overwhelm it. But this is a dream devoid of reality,” he says. “People won’t give up democracy just because Beijing has given them some goodies.” Mr Lai, who moved to Taiwan from Hong Kong because he found its democracy and civil liberties “irresistible”, says that by drawing closer to China economically, culturally and socially – but not politically – Taiwan will get a new burst of vitality.

It may seem odd to be considering any kind of agreement with a country that has 1,300 missiles pointing at your tiny, isolated island. But Mr Ma is betting that China will never use them. Both sides are waiting. Beijing hopes the Taiwanese will eventually see the light and come home to a strong and vibrant China. Taiwan hopes that China will grow rich and more democratic, by which time reunification might not be such a pressing issue. If that is right, Taiwan could yet turn out to be an international flashpoint that, mercifully, will never flash.

You’ve probably heard by now that China, in its bid to lock in access to energy and mineral riches in far-flung corners of the world, is causing heartburn for the legions of do-gooders working to turn the world’s most fragile countries into stable, prosperous states. Everyone from the president of the World Bank to Bono has blamed Chinese companies and government officials for threatening the hard-won progress the West has made in the global south, while warning of dire consequences for countries on the receiving end of Chinese largesse.

Commentators such as Zambian economist Bob Sichinga have even accused Beijing of “raping” Africa in its bid for natural resources. I call it the China effect — the disturbing notion that Western-led development efforts could come to naught, cast aside by the allure of fast money and rapid economic progress. And it’s easy to see the appeal: While U.S. and European gurus are busy lecturing Third World autocrats about good governance and transparency, Chinese engineers are building highways to the dictators’ weekend homes.
COMMENTS (10) SHARE:
Twitter

Reddit

Buzz

Bookmark and Share More…

What’s less well known is the key role such states as Brazil, Kazakhstan, Nigeria, South Africa, and Venezuela are playing in China’s international diplomatic game. Over the past decade and a half, while few in the West were paying attention, Beijing has built a coalition of countries — a great many of them in Africa — that can be trusted to vote China’s way in an increasingly clogged alphabet soup of international fora. It’s a bloc reminiscent of the one the Soviet Union assembled during the Cold War, though focused on economic and trade advantages, not security issues.

So far, China’s strategy is working, and nowhere more so than with Beijing’s campaign to delegitimize Taiwan as an independent state. In 2008, for instance, Malawi announced it had cut diplomatic relations with the island would-be nation; Taipei couldn’t match China’s offer of $6 billion in aid. Senegal broke relations in 2005, signing an agreement that reportedly included an initial $600 million in financial assistance from China. Chad followed suit after a series of secret meetings with Chinese officials and an undisclosed amount of aid. Today, just four African countries still recognize Taiwan as the one true China: Burkina Faso, Gambia, São Tomé and Príncipe, and Swaziland, down from 13 in 1994; the global number has declined from 68 states in 1971 to 23 currently. Even Panama and Nicaragua, two of the few Latin American states that still officially recognize Taiwan, abstained from a vote on its 2007 bid to join the World Health Organization. Taipei’s list of friends is headed rapidly toward zero.
Related
Money Can Buy Love
China isn’t just investing in minerals and oil

Not only is Beijing building a string of alliances across the globe with countries overlooked and sometimes shunned by the United States, but it also aims to alter, or at least complicate, the loyalties of those still in the Western camp. To U.S. officials, most of Beijing’s new allies are decidedly third tier, mere afterthoughts in the West Wing and on the State Department’s seventh floor (at least until a crisis breaks out). But to China, they are becoming an increasingly potent diplomatic weapon.

At the United Nations, support for Chinese positions on human rights jumped from 50 percent in 2000 to 74 percent in 2008, according to the European Council on Foreign Relations. The council also found that 41 countries that were Western-voting allies on human rights issues in the U.N. 10 years ago now support China and Russia. From Africa to Asia to Latin America, these include a notable list of Chinese commercial partners, some of the most undistinguished performers on the Failed States Index. Many of these same countries have joined to vigorously defend traditional sovereignty — a notion deeply important to Beijing because it fears and resents Western meddling in its internal affairs. Support for China and Russia on this issue has exceeded 80 percent in recent years.

China has also deployed this winning formula at the World Trade Organization (WTO). Within the WTO, Beijing has already put together an African coalition large enough to torpedo specific rules it opposes. But the strategic prize China is seeking in Geneva is official status as a market economy — a valuable legal and trade designation that prevents other countries from launching anti-dumping cases. Chinese companies stand to gain billions if Beijing’s diplomats can outmaneuver the United States and the European Union, which accuse China of unfair competitive practices and inadequate bankruptcy and intellectual-property laws. Egypt, Russia, South Africa, Venezuela, and dozens of other countries have proved happy to extend this designation to Beijing on bilateral terms in return for Chinese engagement. Now, China’s goal is to cobble together enough WTO votes from African and Latin American countries to see this protection expanded globally — while teaming up with India to sink the Doha round of trade talks, which threatens to swamp Chinese farmers with a flood of cheap imports.

China is also making great strides within a host of smaller multilateral organizations that don’t invite the United States and the European Union to join — obscure bodies like the East Asia Summit, the Forum on China-Africa Cooperation, and the Shanghai Cooperation Organization. In these venues, Chinese officials have not hesitated to combine soft power with a bit of muscle. African and Asian ambassadors have made off-the-record statements suggesting that China uses its aid and trade as leverage to make them tilt away from U.S. initiatives. If countries do not toe Beijing’s line or don’t abstain when asked, their economic projects could be put at risk.

China’s goal is not to challenge the West militarily or even economically just now. The United States and Europe are, after all, the lifeblood of China’s export economy. But we shouldn’t dismiss China’s efforts as merely a sophisticated reprise of the Soviet Union’s failed bid for the loyalties of the global south. China is a capitalist dynamo, not a creaking autarky, and its market-authoritarian example is fast winning adherents around the world — while marginalizing the values that have informed Western progress for 300 years.